Intel Corporation (NASDAQ:INTC)‘s Internet of Things (IoT) business continued to shine in the third quarter of 2015 as the company posted revenue growth of 10% in the category. For the third quarter, total firm revenue totaled $14.5 billion, up 10% from the prior quarter and beating analysts’ average estimate by $250 million. Sales from Intel’s new Skylake processors were a highlight for the quarter, helping the company to overcome slow personal computer sales in the Client Computing industry. Microsoft Corporation (NASDAQ:MSFT)’s Windows 10 pairing with the Intel Skylake processor release also aided growth in personal computing as third quarter revenue jumped 13% sequentially in Intel’s Client Computing business.
Although things seem to be on the right track, the latest filings by the smart money showed hedge funds decreasing their investments in Intel Corporation (NASDAQ:INTC). Among the funds we track, the number of hedge funds investing in Intel decreased by 13, from 61 to 48, during the second quarter. Insider Monkey’s research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. Insider Monkey has been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see more details here).
Internet of Things
While a small part of Intel’s overall revenue contribution, Intel’s Internet of Things business has been growing significantly and capturing a substantial market share. Intel’s 2014 investment in the Internet of Things was a critical leap for the firm and has paid off substantially as the firm has seen revenue in the business unit grow steadily. At its December 2014 IoT event, the company’s announcements included an added overall commitment to software, hardware, and platform services. Additionally, the firm expanded its services extensively to allow for increased Internet of Things developer opportunities. The firm’s 2014 advance commitment to the Internet of Things has helped the firm to brand itself as the leading provider for a wide range of products and services required to achieve networking success in the Internet of Things.
The 2014 investment helped Intel take a leading position in the Internet of Things business while many of its peers have lagged in marketing services for the market segment. In addition to the firm’s reporting transparency, Intel Corporation (NASDAQ:INTC) has also taken a leading industry position through its activity in Internet of Things industry groups. It formed the Open Internet Consortium and has also been involved in the Industrial Internet Consortium. While its Internet of Things competitors, International Business Machines Corp. (NYSE:IBM), Cisco Systems, Inc. (NASDAQ:CSCO), Advanced Micro Devices, Inc. (NASDAQ:AMD) and QUALCOMM, Inc. (NASDAQ:QCOM), have also been active in industry groups, the competitors have lagged in business investment commitment and reporting transparency.
To further its success in the Internet of Things Intel also recently announced the acquisition of Altera (ALTR) in June 2015. Altera will drive value growth in both Intel’s Data Center and Internet of Things businesses. Altera will add considerably to Intel’s Internet of Things revenue growth also further increasing its competitiveness in the Internet of Things.
According to Intel’s Chief Executive Officer, Brian Krzanich, “Integrating Altera’s world-class technology with Intel architecture in the high-growth data center and Internet of Things market segments will create new product categories and capabilities.”